Key facts
- Annual inflation in Canada reached 3.1% in September.
- Energy prices drove the increase, rising 19% year-on-year.
- Grocery price increases slowed to 1.7% year-on-year.
Canada's annual inflation rate rose to 3.1% in September, surpassing the Bank of Canada's upper limit for the first time in three months, according to data released on Monday. Higher gasoline and diesel prices were the primary drivers of this increase. Analysts had predicted a September inflation rate of 3.2%, up from 3% in August.
On a monthly basis, the consumer price index (CPI) increased by 0.1% in September, a change from a 0.1% deceleration in August. Energy prices saw a significant annual rise of 19%, contributing to a 27.8% year-on-year increase in gasoline costs. Meanwhile, grocery prices continued to moderate, with a 1.7% annual increase, the slowest pace since May 2024. Shelter prices also rose, increasing by 1.8% annually, with rents up 2.8% in September. Air transportation costs surged by 19.4%.
Core inflation measures showed moderation, with CPI-median slowing to 1.9% and CPI-trim at 1.8% in September. This inflation data is the last before the Bank of Canada's monetary policy decision later this month. Money markets anticipate the Bank of Canada will hold its key interest rate at 2.25% on October 28, but are pricing in a 25 basis point hike in December.